WRAPUP 2-Buffett defends Coke, BNSF at Berkshire annual meeting

(Adds details from meeting throughout)

By Luciana Lopez

OMAHA, Neb. May 3 Warren Buffett on Saturday
defended his recent controversial vote on executive pay at
Coca-Cola Co and disappointing performance at railroad
BNSF, as investors grilled him on his Berkshire Hathaway Inc
conglomerate at its annual shareholder
meeting.

The investment guru was peppered with questions at the
meeting, part of a mostly festive weekend that Buffett calls
"Woodstock for Capitalists," following concerns that Berkshire
last year missed Buffett's five-year growth target for the first
time in his 49 years at the helm.

Buffett, 83, and Vice Chairman Charlie Munger, 90, took the
stage at a downtown Omaha arena as they faced off with the
audience and a hand-picked panel often excusing recent worries
at the sprawling conglomerate.

"Over any cycle we will over-perform, but there's no
guarantee on that," he said. Berkshire, he said, is designed to
perform best when markets are at their worst, unlike in 2013
when the Standard & Poor's 500 rose 30 percent.

Buffett was immediately questioned about Berkshire's
decision to abstain from the shareholder vote on Coca-Cola's
equity compensation plan for executives, even though Buffett
thought the controversial plan was excessive.

That revelation drew sharp criticism in the run-up to the
meeting - particularly since Buffett has in the past called
options wasteful and akin to a free lottery ticket.

Seated with Munger at a table containing several bottles of
Coke and Cherry Coke, Buffett said that "going to war" would
likely not have been productive, and that Berkshire's abstention
sent an even more effective message.

"We made a very clear statement about the excessiveness of
the plan and, at the same time, we in no way went to war with
Coca-Cola," Buffett said. "I don't think going to war is a very
good idea in most situations."

Buffett said he had conversations with Coke's chief
executive, Muhtar Kent, including one in Omaha, where he said he
thought the plan was excessive.

"I think the best result for the Coca-Cola Company was
achieved by our abstention, and we will see what happens in
terms of compensation between now and the next meeting of Coke,"
he said.

Wall Street also came under the spotlight from a person
complaining about why more individuals were not being held
criminally responsible for recent misconduct, such as from the
2008 financial crisis.

Buffett agreed, recalling his experience at Salomon Inc more
than two decades ago, when he became chairman to help clean up a
Treasury auction rigging scandal.

"I may be biased from my experiences at Salomon, but I lean
more toward prosecution of individuals than corporations," he
said. "It's way easier to prosecute corporations - it's somebody
else's money, and the prosecution knows it's going to get a win.
(Corporations') calculus is such that it just doesn't make sense
to fight if you can just write a check, while the individual is
fighting to stay out of jail."

WORKING ON THE RAILROAD

The questions came a day after Berkshire posted
first-quarter results that just missed analyst forecasts.

That report noted weather-related disruptions at railroad
BNSF - another topic of concern on Saturday. Buffett handed off,
calling in BNSF executive chairman Matt Rose to talk about the
company's service challenges.

"We're making significant investments," Rose reassured the
audience.

Buffett added that Berkshire could spend "many, many
billions" to improve operations at the railroad, which is the
country's largest player in the booming oil-by-rail business.

In contrast, he said a different business, Berkshire
Hathaway Energy, was more able to grow through acquisitions.

Indeed, much of Berkshire's growth as a company has come
through acquisitions, but it now takes bigger transactions to
move the needle.

Buffett signaled he would gladly partner again with
Brazilian firm 3G Capital, with which he teamed up to buy
ketchup maker H.J. Heinz Co last year for $23.3 billion.

"We're very likely to partner with them, perhaps on some
things that are very large," Buffett said. "I think 3G does a
magnificent job of running businesses."

Later, he added: "What we really want to do at our present
size and scope (is) buy big businesses with good management and
prices, and then build them over time."

Last year, Berkshire underperformed for the first time in
nearly 50 years by Buffett's own preferred measure: gains in the
company's book value, or worth, lagged the S&P 500.

Shareholders at the meeting also rejected a proposal that
Berkshire start paying a dividend, after having not made any
cash payouts since 1967.

GETTING THERE EARLY

The annual meeting in Omaha draws tens of thousands of
people to hear Buffett and Munger talk about business, the
economy, and even politics and life.

It includes a massive exhibit floor that highlights the
breadth of Berkshire's holdings, including Geico car insurance,
Borsheim's jewelry and Dairy Queen ice cream. Before the
meeting, Buffett paid $1 for a Dairy Queen vanilla orange bar.

As usual, hundreds of shareholders lined up outside the
arena well before the doors opened at 7 a.m. CDT.

Michael Rodin, owner of Impact Promotional Marketing
Products in Des Moines, Iowa, said he arrived at 1 a.m., after
having attended more than 20 prior meetings.

"The excitement, to get as close to the action as possible,
and see the man close, and not with his face on the video
screen," Rodin explained on his strategy.

At one point Buffett was asked if he had lost confidence in
Berkshire. In his annual letter to shareholders, Buffett
disclosed that he had suggested to his estate's trustee that
money left to his wife be largely invested in a low-cost S&P
index fund.

The question posed: Why an index fund and not Berkshire
stock?

Because, he said, he's unconcerned about maximizing the
money he will leave his wife after he passes away.

"There will be loads of capital left over" for her, Buffett
said.
(Reporting by Luciana Lopez and Jonathan Stempel in Omaha,
Nebraska; Editing by Bernard Orr)

Dec 9 Coca-Cola Co said on Friday that
Muhtar Kent would step aside as chief executive next year and be
replaced by James Quincey, a company veteran credited with
several recent changes to help the company cut its dependence on
sugary drinks.

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